The 5 Most Common Reasons for Chargebacks

Understanding why chargebacks occur is the foundation for reducing them. Patterns emerge when dispute data is reviewed over time, and those patterns consistently point to a handful of root causes. Some originate from breakdowns in fulfillment or communication. Others stem from fraud or post-purchase behavior that exploits the dispute process itself. Each reason requires a different mix of prevention, evidence collection, and representment strategy.

Let’s take a look at some of the most common reasons for chargebacks and examine how merchants can appropriately mitigate the risk.

Friendly Fraud

Friendly fraud is one of the most common causes of chargebacks across nearly every industry. It occurs when a cardholder authorized a transaction and received what they paid for, but disputes the charge anyway. The label “friendly” is misleading, as the resulting impact on merchants is anything but benign. These disputes often appear legitimate on the surface, which makes them particularly difficult to detect and defend.

In some cases, friendly fraud is unintentional. A cardholder may not recognize a billing descriptor, forget about a purchase, or mistake a purchase by a family member for fraud.

Intentional friendly fraud is also widespread. Some customers dispute charges to avoid return policies, bypass restocking fees, or obtain refunds while keeping the product.

Prevention starts with clarity and transparency. Billing descriptors should clearly identify the business and match the name customers expect to see on their statements. Common points of customer confusion should be identified and explained more clearly or prominently. Post-purchase confirmation emails also help reinforce transaction legitimacy.

When friendly fraud does occur, representment success depends on documentation. Compelling evidence can include proof of purchase, IP address logs, device data, delivery confirmation, and records of customer account activity. Merchants who retain transaction records and customer data in an organized way significantly improve their chances of winning these cases.

True Fraud

True fraud involves unauthorized transactions initiated by someone other than the cardholder. This category includes stolen cards, account takeovers, and transactions made using compromised payment credentials. E-commerce merchants without strong fraud controls are frequent targets, especially those offering expedited fulfillment or digital goods.

At the same time, some consumers make claims of fraud even when they authorized the purchase. This misclassification complicates dispute management and skews fraud metrics.

Preventing true fraud requires layered defenses. Address Verification Service (AVS), CVV checks, velocity controls, and behavioral analysis tools can all play a role. No single tool is sufficient on its own. Risk scoring models that evaluate transaction context, device fingerprinting, and historical behavior can provide stronger protection than static rules.

For representment, true fraud cases are difficult to win unless the merchant can clearly demonstrate authorization. Evidence such as matching AVS data, successful CVV validation, consistent device usage, and prior transaction history can help rebut fraudulent claims when friendly fraud is suspected.

However, merchants should be selective. Contesting legitimate fraud disputes is rarely successful. A disciplined approach that distinguishes between recoverable and unrecoverable cases produces better long-term results.

Product or Service Not Received

Claims of non-receipt are common in both physical and digital commerce. Cardholders may assert that an item never arrived, arrived too late to be useful, or was inaccessible due to technical issues.

Legitimate non-receipt chargebacks often stem from shipping delays, carrier errors, or incorrect address information. International shipments are especially prone to issues involving customs holds or incomplete tracking updates. In service-based industries, disputes may arise when access credentials fail to deliver properly or when onboarding steps are unclear.

Non-receipt claims are also frequently abused. Customers may receive an item and still dispute the charge to obtain a refund without returning the product. Porch piracy and third-party theft introduce additional complexity, as cardholders may hold merchants responsible for events outside their control.

Prevention focuses on fulfillment discipline. Shipment tracking and delivery confirmation reduce ambiguity. Requiring signatures for high-value items adds another layer of protection. Proactive communication during shipping delays can prevent disputes by setting realistic expectations.

In representment, evidence quality is critical. For physical goods, carrier tracking showing delivery to the correct address is often effective. Photos or signed delivery receipts strengthen the case further.

For digital goods and services, server logs, access timestamps, and IP address records can demonstrate that the customer received what they purchased. Merchants should also document any customer communication related to delivery issues, as this can show good-faith efforts to resolve the problem before a dispute was filed.

Product or Service Not as Described

Disputes based on product dissatisfaction or misrepresentation fall under this category. Cardholders may claim that an item differed materially from its description, was defective, or failed to meet expectations. These disputes blur the line between subjective dissatisfaction and legitimate claims.

Legitimate cases arise when product descriptions are inaccurate, images are incorrect, or the goods are counterfeit. Inconsistent quality control or vague marketing language can increase exposure.

At the same time, “not as described” is a common fallback reason for friendly fraud. Customers who regret a purchase or miss return deadlines may dispute the charge rather than engage with customer support. Issuers may be sympathetic to these claims, particularly when evidence is limited.

Reducing these disputes requires precision in marketing and fulfillment. Product listings should include detailed specifications, realistic images, and clear disclosures about limitations. Service agreements should define deliverables, timelines, and success criteria. Internal quality assurance processes help ensure consistency between what is promised and what is delivered.

Representment strategies focus on alignment between the offer and the outcome. Evidence may include screenshots of product pages, copies of service agreements, delivery records, and customer acknowledgments.

If the customer continued to use the product or service after raising concerns, usage logs can help undermine claims of dissatisfaction. Clear refund and return policies, when properly disclosed and enforced, also strengthen the merchant’s position.

Cancelled Subscriptions

Subscription-related chargebacks are a persistent challenge, particularly for businesses relying on recurring billing. These disputes often stem from misunderstandings around cancellation procedures, billing cycles, or trial conversions.

Legitimate subscription chargebacks occur when cancellation requests are not processed correctly, and customers are billed again. However, most subscription disputes are cases of friendly fraud.

Cardholders may cancel too late, overlook billing dates, or ignore terms they agreed to during signup. Instead of contacting the merchant, they dispute the charge, often claiming they canceled earlier or were unaware of the renewal.

Prevention hinges on transparency and accessibility. Cancellation policies should be easy to find and simple to execute. Confirmation of cancellation should be immediate and documented. Reminder emails before renewals reduce surprise charges and demonstrate good-faith communication.

When representing these chargebacks, documentation is essential. Evidence may include signup records, acceptance of terms, billing history, cancellation timestamps, and proof of continued service access. Merchants who can show that a customer used the service after the billing date have a stronger case.

Turning Insight into Action

Chargebacks are not random events. They reflect patterns in customer behavior, operational execution, and risk exposure. Merchants who treat disputes as isolated incidents miss opportunities to address root causes and improve performance across the payment lifecycle.

Reducing chargebacks requires collaboration between marketing, customer support, fulfillment, and risk management teams. Clear communication, accurate recordkeeping, and thoughtful dispute strategies create a defensible position when challenges arise. Not every chargeback can or should be contested, but every chargeback can provide insight.

The most successful merchants view chargeback management as an ongoing process rather than a reactive task. By understanding why disputes occur and responding with intention, businesses protect revenue, preserve relationships with payment partners, and build a more resilient operation over time.